526 OLIVE STREET PTY LTD v WESTPAC BANKING CORPORATION

Cole JA The appeal having been discontinued there remains only one issue arising in the cross-appeal brought by Westpac Banking Corporation. That relates to the proper construction of cl24.4(a) of a Unit Subscription and Site Management Agreement dated 23 May 1986 made between various parties to this appeal.

Background facts relevant to an understanding of the extant construction point are in short compass. On 23 May 1986 Westpac Banking Corporation (Westpac) and the appellants entered into a Unit Trust and Site Management Agreement. Westpac subscribed for 17 million units nominally valued at $1 each. On 23 May 1991, the Manager under the agreement determined that the redemption price for Westpac's units was $17,834,093. That redemption price was paid to Westpac on 28 May 1991.

C124.4(a) contained the mechanism for resolving disagreements between the parties regarding such a determination by the Manager. It provided:

"Tf any party to this agreement disagrees with any determination by the Manager referred to in cl24.1 then that party may, within 15 Business Days of its receipt of notice of that determination, have the determination referred to a member of the Association of Consulting Actuaries (or its successor) appointed by its President for the time being."

The fifteen business day period referred to in cl24.4(a) expired in relation to the Manager's determination of the redemption price of the units on 14 June 1991.

On 12 June 1991 the appellants sent a notice to the President of the successor to the Association of Consulting Actuaries requesting the President to appoint a member of the Institute to act as an expert. The notice stated that:

"(The Companies) hereby request the President of the Actuaries Institute of Australia TO APPOINT a member of the Actuaries Institute of Australia to act as an expert in the matter of an Appeal from a determination of the Redemption Price by the manager pursuant to the provisions of unit subscription and site management agreement dated 23rd day of May 1986 BETWEEN WESTPAC BANKING CORPORATION, PEARSALL PROPERTY DEVELOPMENTS PTY LTD, 526 OLIVE STREET PTY LTD AND T E PEARSALL HOLDINGS PTY LTD such determination being made on the 23rd day of May 1991 in the sum of $17,837,093. AND PEARSALL PROPERTY DEVELOPMENTS PTY LTD (Receivers and Managers appointed) 526 OLIVE STREET PTY LTD (Receiver and Managers appointed) AND T E PEARSALL HOLDINGS PTY

LTD (Receivers and Managers appointed) pursuant to subcl24.4(a) of the said Unit Subscription and the Site Management Agreement, hereby give (sic) refer to the member appointed by the President the determination of the Redemption Price for his decision."! Giles J found:

"The President telephoned Mr Purvis on 12 June 1991 He told her that he could not decide whether he could take the appointment "until I have had a look at the documents". According to agreed facts, the President requested Mr Purvis to act as expert on 13 June 1991, although there was no other evidence of a communication between them on that day. According to Mr Purvis, he received by fax from the receiver and manager on 13 June 1991 what appear to have been copies of the notices and the receiver and manager's covering letter, and thereafter received other documents. During this period Mr Purvis spoke to the representative of the receiver and manager, saying that he would be prepared to act as an expert if he could but would need to see the agreement and other relevant documents and (in a later conversation) that he would be able to act as expert but would like to meet the parties *to make some enquiries". There was no evidence of a meeting. The agreed statement of facts included that Mr Purvis accepted the appointment and informed the receiver and manager that he would act as the expert on 25 June 1991. There was no evidence of communication between Mr Purvis and the President after 12 June 1991.

The fifteen business days referred to in cl24.4(a) of the Agreement expired on 14 June 1991. If it was necessary that Mr Purvis be appointed by the President within the period of fifteen days, he was not appointed within that time."2

On 10 February 1993 Mr Purvis issued a document entitled "expert decision" to the effect that Westpac should refund $2,011,698 to the first appellant 526 Olive Street Pty Ltd. That sum was not paid. The appellant company commenced proceedings in the Commercial Division. By its defence Westpac denied that Mr Purvis was properly appointed as an expert under cl24.4(a) and, by its cross-claim, sought a declaration to that effect.

Giles J rejected that contention. In addition to holding that Mr Purvis was not appointed within the fifteen business days referred to in cl24.4(a), his Honour held that Mr Purvis did not indicate his assent to act as an expert within the fifteen day period, nor was his proposed appointment communicated to Westpac within that time.

Nonetheless his Honour concluded that it was sufficient for the purposes of c124.4(a) that the notices were give to the President within the fifteen day period and further, that the time limit in cl24.4(a) was not of the essence. Thus the cross-claim was dismissed. This appeal is against that dismissal.

On the appeal Westpac contended that the natural and ordinary meaning of c124.4(a) required that within the fifteen day period the expert must be appointed, and additionally the manager's determination must be referred to the appointee. Neither had occurred within that time. It was argued that the appointment had not occurred within time because, for there to be a valid appointment there must be a communication to the expert of his nomination, an expression by the expert of his willingness to act, and notification of the appointment to the parties. None of these three steps occurred within the fifteen day time limit. Further, it was argued that the time limit in cl24.4(a) was to be regarded as essential because this was a commercial transaction involving large sums of money entered into between

1. Appeal Book, page 48G-P.
2. Appeal Book, page 214U-215S.

URJ526 OLIVE STREET PTY LTD v WESTPAC BANKING CORPORATION (Cole JA) 3

parties sophisticated in commercial dealings. In addition, time was of the essence in relation payment of monies payable by the trustee under the agreement (cl16.1), the agreement was intended to be of relatively short duration and the "tax consciousness of the transaction" indicated a desire for speedy determination of the final position regarding receipts. The approach of the House of Lords in United Scientific Holdings Ltd v Burnley Borough Council? which treated as non-essential time provisions relating to the appointment of a valuer in respect of rent review clauses in leases should be confined to that area of the law.

Each of the submissions advanced on appeal were advanced to Giles J at first instance. His Honour addressed each contention in his judgment.4 His Honour addressed each of the authorities upon which the appellant relies.

I respectfully adopt the analysis and reasoning of Giles J regarding each contention advanced. I would add only the following. Where parties provide in a commercial agreement that to exercise a right, here to appeal a determination, a party must give a notice within a nominated time, at common law that time provision is regarded as essential in the sense that failure to give the notice within that time denies the capacity to exercise the right. As Samuels JA made clear in G R Mailman and Associates Pty Ltd v Wormald (Aust) Pty Ltd,5 a contractual provision means what it says. Here that means that a party dissatisfied with the Manager's decision was required to give the notice to the President of the Association of Actuaries requiring him to appoint a member as an expert within fifteen days. If that was not done, the right to challenge the determination was lost. In that sense, the fulfilling of that requirement by a dissatisfied party within fifteen days was essential. Mailman, and similar cases, all deal with steps which a party is required to take and which it can effectively take within a defined time period, and thus time is regarded as being essential.

It is otherwise, however, where steps are required to be taken by a third party over whom the moving party has no control. It would take the most explicit of words to impose essentiality of time upon the acts of a third party, in a provision, which required the third party to take steps to complete the process which the party had initiated within time, so as to deny the party, innocent itself of default, of its right. That is because, commercially, parties would be unlikely to have made the right of each party effectively to appeal to depend upon the act of a third party. They are not to be assumed to have agreed that their right of appeal is to be rendered nugatory or ineffective by inefficiency, negligence or mischance which might affect that third party and delay its acts, and thus prevent an effective appeal which the parties have agree each may have.

I do not read the decision of Giles J as saying anything to the contrary. In introducing his discussion of whether time was of the essence, his Honour limited his discussion to "the referral and appointment of Mr Purvis". His Honour was not addressing whether the taking of the initial step by the dissatisfied party must occur within fifteen days.

For these and the reasons given by his Honour the cross-appeal should be dismissed with costs.

Counsel for the appellant: RBS Macfarlan QC/ TJ Renwick

3. [1978] AC 904
4. page 14-24 inclusive; Appeal Book 215-225.
5. (1991) 24 NSWLR 80 at 90

Solicitors for the respondent: Allen Allen and Hemsley Counsel for the second respondent: RJ Benjamin (a solicitor)

Solicitors for the second respondent: RJ Benjamin and Co